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Note 9 - Income Taxes
6 Months Ended
Jun. 30, 2014
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

Note 9 – Income Taxes


The Company's provision for income tax expense was 31.2% and 2.6% of income before income taxes for the second quarters ended June 30, 2014 and 2013, respectively. The rate in the second quarter 2014 was lower than the statutory rate due primarily to the effect of foreign operations where tax rates tend to be lower as well as the domestic manufacturing deduction. The rate in the second quarter 2013 was positively impacted by tax law changes related to enacted legislation which lowered the corporate income tax rates in Denmark. The impact of this change was a reduction of a deferred tax liability, which was recorded as a discrete adjustment to income tax expense in that quarter in the amount of $258,000. The Company's effective tax rate for the second quarter 2013 would have been 33.9% if this one-time adjustment had not been made.


For the six-month period ended June 30, 2014, the Company's income tax expense was 31.2% of income before income taxes compared to 15.5% for the same period of 2013. The rate for the first six months of 2014 was lower than the statutory rate due primarily to the effect our foreign operations and the domestic manufacturing deduction. The rate for the first six months of 2013 was positively impacted by the tax law changes noted above as well as the domestic tax law change related to research and development credits which was effective in the first quarter 2013. The Company's effective tax rate for the six months ended June 30, 2013 would have been 28.5% if the adjustment for the change in the Danish tax rates had not been made.


As of June 30, 2014 and December 31, 2013, the liability for gross unrecognized tax benefits was $320,000 and $304,000, respectively. Changes in gross unrecognized tax benefits during the six-months ended June 30, 2014 primarily consisted of an increase for tax positions taken in the current year. It is expected that the amount of unrecognized tax benefits for positions which the Company has identified will not materially change in the next twelve months.